Feb. 24 (Bloomberg) -- International Business Machines
Corp. is expanding its cloud services to lure customers to its
SoftLayer Technologies Inc. business, which it’s counting on to
help reverse seven quarters of falling sales.

IBM is making it easier for developers to build and adjust
applications in the cloud, where information is delivered online
instead of stored on local servers, said Danny Sabbah, chief
technology officer of IBM’s Next Generation Platform. The
Armonk, New York-based company plans to spend more than $1
billion on cloud-software development through 2015, a double-digit percentage increase from the past two years.

The move increases IBM’s bet on SoftLayer after acquiring
the company for $2 billion last year and committing $1.2 billion
in January to add 15 new data centers. As customers rely on the
cloud rather than buying their own servers, a slump in hardware
demand has contributed to IBM’s declining revenue.

“This is crucial to expanding the potential audience and
helping them get benefit and value from using SoftLayer,”
Sabbah said in an interview. “This is not just about IBM’s
conventional enterprise customers. There will be a lot of
emerging companies in different areas.”

The move underscores SoftLayer’s position as one of IBM’s
biggest gambles as it faces off with competitors such as
Amazon.com Inc. in cloud services.

Big Bet

The price IBM paid to acquire Dallas-based SoftLayer last
year was the biggest it has disclosed for a takeover since the
purchase of software company Lotus Development Corp. in 1995,
according to data compiled by Bloomberg. SoftLayer is becoming
the backbone for IBM’s cloud business as the company wound down
its legacy SmartCloud Enterprise product this year, Lance
Crosby, chief executive officer of SoftLayer, said in an
interview last month.

IBM is making these new capabilities available for
SoftLayer in hopes of attracting customers in different
industries than the typical bank and insurance clients that use
its cloud products at the moment, Sabbah said. One new addition
is an open-source enterprise software portfolio called BlueMix,
a platform-as-a-service that aims to help developers build
applications on its cloud infrastructure.

IBM has agreed to acquire Cloudant Inc., a cloud-delivered
database company, whose services will be offered in the BlueMix
portfolio, the company said today in a statement. Financial
terms weren’t disclosed.

Watson Services

SoftLayer will also gain middleware offerings, including
WebSphere, to let apps be installed on hybrid clouds, which can
access data both onsite and offsite.

IBM also said last month that it would create a new
business division around its Watson technology, which can
analyze large volumes of data and answer questions in
conversational language. IBM will invest more than $1 billion in
the unit and give it a headquarters in New York. Watson’s big-data services, which let customers mine vast troves of
information, will be run on SoftLayer’s cloud.

IBM will integrate its Power Systems servers into
SoftLayer’s cloud to help support Watson and will make it
available in the second quarter of this year, said Robert
Leblanc, senior vice president of software and cloud solutions
at IBM.

“We’ve been shifting resources for a number of years into
this space,” Leblanc, said in an interview. “The $1 billion is
additional investment over the next two years to continue down
that path and bring even more services out to the cloud.”